ATA Creativity Global

Greetings. Welcome to ATA Creativity Global's first quarter 2024 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you would like to ask a question, please press star 1 on your telephone keypad. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Alice Zhang with the Equity Group. Thank you. You may begin.

Thank you, operator, and hello, everyone. Thank you for joining us. The press release announcing ATA Creativity Global's, or ACG's, results for the first quarter ended March 31, 2024 is available at the IR section of the company's website at www.atai.net.cn as part of this conference call. The company has an accompanying slide presentation available on its website. A replay of this broadcast would also be made available at ACG's website for the next 90 days. Before we get started, I would like to remind everyone that this conference call and any accompanying information discussed herein contains certain forward-looking statements within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. This forelooking statement can be identified by terms such as anticipate, believe, could, estimate, expect, forecast, future, intent, look forward to, outlook, guidance, plan, should, will, and similar terms that include, among other things, statements regarding ACG's future growth and results of operations, ACG's plans for mergers and acquisitions generally, ACG's growth strategy, anticipated gross prospects, and subsequent business activities, ACG's 2024 guidance, market demand for and market acceptance and competitiveness of ACG's portfolio training programs and other education services. Although the company believes that the expectations reflected in its forward-looking statements are reasonable as of today, those statements are subject to recent uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct. Information about the risk associated with investing in ACG is included in filings with the Securities and Exchange Commission, which we encourage you to review before making an investment decision. The company does not assume any obligation to update any forelooking statements as a result of new information. future events, changes in marketing conditions or otherwise, except as required by law. Regarding the disclaimer language, I would also like to refer you to slide two of the conference call presentation for further information. All U.S. dollars amounts in this conference call relating to financial results for the first quarter ended March 31st, 2024 are converted from RMB using exchange rate of 7.2203 RMB to one U.S. dollar to noon buying rate as of March 31st, 2024. Our historical conversions are accurate as of the time reported unless otherwise noted. The company reports its financial results under the U.S. GAAP in RMB, and all percentages calculated in the presentation are based on RMB unless otherwise noted. For those of you following along with the accompanying PowerPoint presentation, there is an overview of the company on slide three. In addition, we're more than happy to take any questions during today's Q&A session or via email to the company. If you wish to ask questions, you can send your questions to the email address azhang at equityny.com. And please specify whether you would like to have your name read during Q&A session. On today's call, the company's CFO, Mr. Rob Aizuma, will provide a brief overview of operating and financial highlights for the first quarter of 2024. As president, Mr. Jun Zhang is unable to be here today. The company's chairman and CEO, Mr. Kevin Ma and Mrs. Sima, We'll follow with an update on the company's guidance, outlook, and its long-term growth strategy before opening the floor for questions. With that, I'll turn the call over to ACG CFO, Mr. Roby Sima. Please go ahead, Mr. Sima.

Thank you, Alice, and welcome, everyone, and good evening to those in America. We appreciate everyone's time. We're pleased to start 2024 on strong notes, achieving our 13.7% increase in total net revenues in first quarter 2024 driven by significant growth in portfolio training services as a result of increased student enrollment and credit hours delivered. We continue to reveal portfolio training as our primary growth driver and gratitude to see continued growth student interest in our premier creative arts offerings. To better support our growing student population, we recruited additional teaching staff. We have also expanded our sales team to meet growth demands. We'll continue to enhance our research-based learning and overseas study counseling services to provide students with a comprehensive portfolio of offerings that provides a strong foundation in creative arts and extensive choice of areas in which to specialized with ample opportunities to experience history and culture and showcase their learnings in the real world. Total student enrollment for fourth quarter 2024 was 1,370, up nearly 25% from 1,097 in prior year period. Enrollment in our core portfolio training programs increased more than 33% with 863 students enrolled during the fourth quarter of 2024. Compared to 648 students in the prior year period, we also delivered 33,527 portfolio training credit hours, an increase of 21.3% year over year. With that, let's move to financials for fourth quarter 2024. Total net revenues for fourth quarter 2024 was RMB 48.1 million, up 13.7% from RMB 42.3 million in the fourth quarter of 2023. This was primarily driven by increased contributions from the portfolio training services, which represented 73.7% of total net revenues during the period. Growth margin improved to 45.5% during fourth quarter 2024 from 44.3% in the prior year period. We realized increased efficiencies in our operations despite increased cost of services related to the hiring of additional teaching staff to support the enrollment growth. Net loss attributed to ACG was RMB 17.9 million during the fourth quarter 2024. compared to RMB 17.8 million in the prior year period, which was primarily a result of incurred sales expenses related to the hiring of additional sales personnel to support the continued growth for our portfolio training services business. Moving to the balance sheet, we continue to be in a solid financial position with US dollar 8 million in cash and cash equivalents. Working capital deficit was US$36.9 million, and total shareholders' equity was US$13.3 million at March 34, 2024, compared to working capital deficit of US$34.4 million and shareholders' equity of US$15.9 million respectively at December 34, 2023. With that, I'd like to turn it over to Kevin. who will expand upon our outlook and growth strategy. Kevin. Thank you, Sima.